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Gap between rich and poor in South Africa widens  Comments

Report says other policies to redistribute wealth needed

February 3, 2010

By SAMANTHA ENSLIN-PAYNE


  • To view the full Organisation for Economic Co-operation and Development report entitled: "Trends in South African income distribution and poverty since the fall of aparthein" - click here

    The gap between the rich and poor in South Africa has widened, not only between race groups but also within race groups, suggesting that the government needs other policies besides black empowerment to redistribute wealth.

    This is according to a report published by the Organisation for Economic Co-operation and Development (OECD), which says income inequality in South Africa increased between 1993 and 2008, making inequality levels in the country among the highest in the world.

    The report, researched and written by the Southern African Labour and Development Research Unit at the School of Economics at the University of Cape Town, says levels of poverty and inequality continue to bear a persistent racial undertone.

    But the most important conclusion is that inequality and poverty among Africans have increasingly dominated the aggregate measures.

    "While between-race inequality remains high and is falling only slowly, it is the increase in intra-race inequality (that) is preventing the aggregate measures from declining. Therefore policy initiatives (that) address the increase in intra-racial inequality are recommended, rather than those focused solely on redistribution between inter-racial population groups."

    The report says race-based redistribution may become less effective over time relative to policies addressing increasing inequality within each racial group, and especially among Africans.

    Rising inequality within the labour market - due to rising unemployment and rising earnings inequality - lies behind rising levels of aggregate inequality.

    "These labour market trends have prevented the labour market from playing a positive role in poverty alleviation."

    The report says that although real incomes have been rising for all groups over the long run, many Africans in the country still live in poverty.

    "At any poverty line Africans are very much poorer than coloureds, who are very much poorer than Indians, who are very much poorer than whites."

    Social grants have altered the levels of inequality only marginally, but have been crucial in reducing poverty among the poorest households.


    Lumkile Mondi, the chief economist at the Industrial Development Corporation, said inequality was increasing on all fronts - between race groups and within race groups. "So it's a class problem."

    He said the focus in the past 15 years had been on deals for black people with access to power, leaving behind the poor.

    "We need policies that address class, rather than talk to race," he said.

    Athol Trollip, the DA's parliamentary leader, said it was clear from the OECD's findings that the government's socio-economic policies had not done enough to adequately address the yawning gaps of the past.

    "Instead the gap between the rich and the poor continues to increase, largely due to the fact that many of these policies have only served to reward a handful of people based on their position in and ties to the ANC government," he said.

    However, Duma Gqubule, from black economic empowerment (BEE) consultancy KIO Advisory Services, said yesterday that it was "absolute rubbish" to blame inequality on BEE, particularly ownership deals.

    "Inequality is due to a lack of jobs and the education system," he said.

    Gqubule said education was the biggest leveller, but in South Africa "the education system is genocidal on black children".

    He dismissed views that spending on education was already too high and said far more needed to be spent on education to level the playing fields for all schools.

    "Massive financial resources should be spent on education. Anyone who has seen a township school knows it will take money to fix the problem," he said.

    Gqubule said a redistribution of wealth could only be done with more aggressive tax on the first economy.

    The OECD report noted that despite the increase in educational attainment, younger people had the highest incidence and share of poverty and this had not improved notably over time.

    The report said: "The fact that better educated people remain poor suggests the labour market has not been playing a successful role in alleviating poverty and that the education system is not delivering the skills needed in the labour market."

    There had, however, been continual improvements in non-monetary well being, for example, access to piped water, electricity and formal housing, between 1994 and 2008.
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    Showing page 1 of 3 comment pages, 22 total comments
    28 Weeks ago Anonymous wrote :
    Well, there is still alot of greed from white folks out there and some don't have proper qualification or skill and yet earn high salaries. Others work hard but we can't overlook the governments involvement in all this. Its a problem as black folk make up 2/3 of the population but still have the effects of slow service delivery. Government must work on improving townships into surburbs and get those services in and quick. BEE must continue too and slowly but surely the change will happen!!!
    30 Weeks ago Proudly SA wrote :
    The problem fundamentally lies with black people having a scarcity mentality. The thinking that says you can be rich and I also be rich. So what you then find is a bitter struggle for the crumbs which manifests itself at municipal level through battles relating to 'deployment'. At another level is observable through the exclusionary nature of the so called Broad Based BEE deals. Interestingly this can't be blamed on Apartheid because even during our struggle, as black people we were ever generous especially to those who were struggling to make ends meet within our communities. The problems are systemic but sadly black people are sitting on top those very systems, they are both aloof and apathetic to the suffering of their own. In short until we regain our moral compass we will continue to be an example to the world of how not to redistribute wealth.
    30 Weeks ago Anonymous wrote :
    With the many policies that are currently in place to redistribute wealth, we can still clearly see an ever widening gap between between the rich and poor amongst the black races. How many of the "rich" blacks have associates/contacts within the current "admeeneestrayshun" ? Surely now it should be easy for someone to point out to the voting masses that the ANC and all its cronies are only in it to enrich themselves at the expensive of the poor !
    30 Weeks ago Mahmood wrote :
    Not only is the gap increasing, but more rich are falling into the chasm and when they do drag themselves out, find themselves on the poor side.
    30 Weeks ago Anonymous wrote :
    BEE stands for Black Elite Enrichment, period. I agree with Lumkile Mondi who says that "We need policies that address class, rather than talk to race". If the government does not do that, they must stop talking about the poor because there are poor people amongst all race groups. They should then rather talk about poor blacks.
    30 Weeks ago Lionel wrote :
    It can only be all those wealthy ANC politicians, most with new BMW 7 Series and other luxury vehicles, coupled with those wealthy black businessman who are well connected to these ANC politicians and cadres, who are all creating the widening of the inequality gap between the rich and poor within the intra Black African group. Oh, and then of course there is Juluis Malema, who makes no bones about living the rich life and throwing this in the face of poor Blacks.
    30 Weeks ago Anonymous wrote :
    I agree with Mr Gqubule's comments. Education is the biggest problem. The wealth is generally in line with levels of education. Action needs to be taken to further strengthen schools. They should not be making the exams easier, but lifting the quality of schools. But education is not only about schools. Much of what we learn when we are growing up comes from our parents. Children with uneducated parents will not get as good a start to life as those with well educated parents and are more likely to struggle in school. The effect of bantu education will be felt in this country for many years to come.
    30 Weeks ago rochelle beneke wrote :
    i thought when the black goverment took over that they had a plan of action!surely they must have after what they had suffer in the "apartheid era"you learn by yours and others mistakes...dont fight fire with fire and be bitter towards the past.do what is right for our people so that everybody can benefit,right?!!!its not my job or your job to think for this goverment.they get paid to do so!Good Luck!!
    30 Weeks ago Durbs wrote :
    This is not just a South African situation, it is world wide and has been so for centuries. The stupid, will always be dominated by the clever; it has nothing to do with colour. Wealth will always be accumulated by the industrious, the lazy will just accumulated flies.
    30 Weeks ago Chris wrote :
    If the chief economist says its a class thing - then we have a fundamental problem. We still think in class and grade people. This issue in my mind only has 1 aspect regarding colour - and that is of because of where we are coming from and our history. The major isuue going forward would be for the government and the labor market to set minimum and maximum salary rages. We need to distribute the salaries and income so that all people can live. Companies need to be transparent with showing their employee salsry rages. Yes - there will be a difference in salaries but this has to fall within a minimum and maximum guideline. The govenment needs to change and transofrm to provide a better social system, better infrastructure (like public transport), better healthcare, tackle povery, better access education and make the country safe.
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